Tuesday, October 31, 2017

Ths Rise and Fall of Socialism

The DOC (Dialogue Of Civilisations) Research Institute, Berlin, has funded a research project led by Vladimir Popov on “Inequality: Economic Models and Russian October 1917 Revolution in Historical Perspective”. The project (an earlier full draft of which is here) seeks to examine why capitalism was successful for several centuries, why it failed in the XX century and was replaced by socialism in about one third of the world, and why socialist societies did not succeed and eventually made a transition back to capitalism.

The project’s key hypothesis is that the income inequalities associated with capitalism initially raised savings and investment promoting economic growth, but later their negative implications dominated.  Soviet-type socialism failed, but rising inequalities of capitalism today are bound to generate rising social tensions eventually becoming unbearable and leading to a costly social revolution. A better alternative is the successful establishment of a “new socialism” “that will not necessarily mean a total elimination of markets and private property, but is likely to limit both substantially for the sake of achieving lower income inequality” - with the pursuit of redistributive policies, more regulation and taxation, more public property. The introduction of such “new” socialism in a few countries in a capitalist world would make them more competitive and drive their less enlightened competitors “out of business”.  Thus Popov stands “socialism in one country” on its head, turning it from a handicap into a competitive advantage.

Vladimir Popov, a distinguished Russian economist known to this Blog’s readers from several guest posts already published, was brave enough to assign to me a paper on “The rise and fall of socialism”, and I was unwise enough to take on such a daunting task for presentation at the Berlin conference of 23-24 October. 

My Berlin Conference PPT Presentation is available HERE. Comments welcome.